Does Gov't Funding Help or Hurt Tech Innovation?

I was recently travelling in Western Canada and was amazed to see first-hand some of Canada's hotbeds of innovation -- technology clusters and centres of excellence gaining world-recognition, yet I'd argue few Canadians know they exist. I didn't know about many of these collaborative ventures driving advances in technology, manufacturing, and medical sectors. For example, did you know Edmonton, Alberta has a world-renown nanotechnology cluster? Or, that we've built a biotechnology clusters in Winnipeg, Manitoba and Montreal, Quebec? That Saskatoon is home to a leading plant biotechnology cluster?

While many Canadians are familiar with Kitchener-Waterloo's Tech Triangle (brought to the mainstream by companies like RIM), I doubt many are aware of Canada's other world-class research and innovation centres.

Technology clustering is a concept built on the premise that by encouraging like-minded entrepreneurs to develop their ideas in specific geographic locations, we encourage greater collaboration and partnerships. Canada's National Research Council (NRC) developed several clusters in Canada in the '80s with the following belief:

"Cluster players work diligently and creatively to build international relationships with compatible organizations and technology communities abroad. Working across borders attracts the world's best and freshest ideas to Canadian communities and, as a result, builds our pool of highly skilled workers. Successful clusters create a brain gain for Canada."

While I was pondering these amazing clusters at home (ones that I argue are helping to positively move Canada's innovation agenda forward), I attended a presentation by Deloitte's Bill Currie on Canada's productivity and clusters once again took centre stage. Currie explained that while some of the NRC initiatives have been successful, others have failed to reach their promised potential. He said a top-down (a.k.a. federal) approach doesn't work. It needs grassroots support to gain momentum.

"Businesses within an area, local universities, and all levels of government -- including municipal -- must collaborate for clusters to take root... Local businesses, municipal governments and nearby universities have the strongest grasp of local strengths."

Deloitte believes clusters have merit and includes them as a key strategy in its future of Canada's productivity report.

At the same time as we have experts calling for the encouragement of clustering, we seem to be on the cusp of dismantling them if the government follows recommendations in a recent report calling for changes to government R&D funding and the NRC.

Currie notes success in development of clusters needs to be measured in decades not years, which leads me to wonder if we measuring success too soon? I worry that policy changes could stifle the positive strides we have been taking in attracting and developing clusters of expertise that will, in time, effectively move us from a resource-based economy to a knowledge-based economy of the future. Is now not the time to encourage science-based education and provide a fertile environment world-class innovation?

What do you think, are we tossing the baby out with the bathwater when we call on governments to cease funding? Are clusters the innovation-makers that can help us move away from our traditional resource roots or simply government spending run amok? Do you have a better way?